Determinants of Formulary Placement in Medicare Part D
Discussant: Matthew Schmitt
Price negotiations between PBMs and pharmaceutical companies are an important determinant of formulary placement, and I examine the fundamental factors that affect their likely bargaining positions in these negotiations. Plans also have incentives to design formularies that attract beneficiaries who use drugs in therapeutic classes associated with profitable health conditions. To test the extent to which this happens, I develop a measure of plan generosity across therapeutic classes, and exploit variation in the profitability of certain classes and plan differences across MA-PD and PDP formularies.